Campaign Finance Laws and the
Federal Election Commission
GOVT 2305
In this set of slides we touch on the history
of US campaign finance laws, as well as the
nature of the Federal Election Commission
and the current state of campaign finance
law in the United States.
We will also look at Supreme Court
decisions regarding constitutional issues
surrounding campaign finance laws, as well
as critiques of the effectiveness of these
laws.
Here are a few sites you might
want to visit to get a preliminary
look at the subject.
From the Washington Post: A
Special report on Campaign
Finance.
Wikipedias:
Campaign Finance in the United
States
Campaign Finance Reform in the
United States
And Some Past Blog Posts on
Campaign Finance, Citizens United,
Money in Politics, and the Money
Primary.
It might be helpful to scroll through
this:
Open Secrets: Glossary of Terms.
Notice that this subject will allow
us to look at activities of each
other three branches of
government.
Rules regarding campaign finance
constantly evolve due to the
interrelationship between each
branch.
A key question that will underlie the bulk of this
section is whether campaign funding –
especially the fact that funding is unequal –
distorts democracy and. Does it cancel out the
principle of majority rule and allow the wealthy
to dominate the political process?
Beyond that, is this a problem that requires a
legal solution and if so, what type of solution?
But this concern has to be
balanced against the claim that
campaign finance laws, by placing
limits on campaign spending
actually limit speech – which is a
constitutionally protected right.
First Amendment Center:
Campaign Spending
Campaign Spending, Free Speech,
and Disclosure
What follows is a walk through
legislative, executive and judicial
activities regarding campaign
finance.
It’s a good illustration of the checks
and balances.
A Walk through the History of
Federal Campaign Finance Laws
Campaign finance laws have four basic
purposes:
1 - Limit contributions to ensure that wealthy individuals and
special interest groups did not have a disproportionate influence
on Federal elections
2 - Prohibit certain sources of funds for Federal campaign
purposes
3 - Control campaign spending
4 - Require public disclosure of campaign finances to deter abuse
and to educate the electorate.
There were no federal laws related to campaign
finance until the late 19th Century. Recall that
politics in the early decades of the republic, as
well as the colonial era, was explicitly elitist.
Limiting suffrage to property owners restricted
participation to the wealthy. Political bias
towards wealthy property owners was a fact of
life.
As described elsewhere, campaigns
during this period of time were
informal and not all that expensive.
Campaigning – as we know it - was
considered undignified.
There was no need to mobilize a large
population. Campaigning involved
connecting with a small handful of
established elites.
The need to have campaign laws
did not arise until suffrage
expanded and campaigns were
necessary in order to win office.
These needed to be funded.
The need to campaign emerged
with the rise of mass politics when
suffrage was expanded to the nonproperty owners during the era of
Andrew Jackson and the birth of
the spoils system.
“In the early nineteenth century, the spoils system was
instituted, under which election winners rewarded their
supporters with lucrative government jobs in return for their
support. Government employees were then taxed an
"assessment" to fund the political campaigns of the elected
leaders and the political party in power. This led to the birth of
modern political campaigns, in which politicians travel the state
or country attempting to persuade citizens to vote for them. In
order to succeed in these larger platforms, such campaigns
required additional financial contributions from supporters.
The first attempt to regulate campaign finance came in 1837,
when Congressman John Bell of Tennessee, a member of the
Whig Party, introduced a bill prohibiting assessments. Congress,
however, did not vote on it.” – Source.
These assessments became part of
the glue that bound the various
components of the political
machines that began to dominate
urban politics.
Control over the flow of campaign
cash allows for control over the
political system.
Contributions were expected from
corporations and government
employees, and anyone or
anything with interests from the
government.
Recently, in Texas, this has been
referred to as pay-to-play.
The first federal campaign finance
law, passed in 1867, was a Naval
Appropriations Bill which
prohibited officers and
government employees from
soliciting contributions from Navy
yard workers.
The Pendleton Civil Service Reform
Act of 1883.
Established the United States Civil Service
Commission and mandated that public jobs
be awarded on the basis of merit, not
political connections. It prohibited firing
government employees for political
reasons and soliciting campaign donations
on federal property.
Congress had been resistant to
passing the law since they were
politically dependent upon
patronage.
But the law’s passage was pushed
following the assassination of
James Garfield by an allegedly
disgruntled office seeker.
By making the agency a commission headed by a three
person appointed panel it was hoped that the
organization would be semi-independent and be able
to make appointments without the control of the
president.
Note that the commission “was dissolved as part of the
Civil Service Reform Act of 1978; the Office of
Personnel Management and the Merit Systems
Protection Board are the successor agencies.”
The Tillman Act of 1907 prohibited
monetary contributions to national
political campaigns by
corporations.
It was promoted by Theodore
Roosevelt after the 1904 when he
was criticized for accepting
corporate contributions.
Note that TR had been William McKinley’s vice
president who was elected president in 1896 and 1900.
McKinley’s campaigns were run and funded with the
assistance of the industrialist Mark Hanna.
The 1896 campaign set records for campaign spending
– mostly from businesses and corporations – that
would last for 25 years. Click here for a timeline that
argues that the election of 1896 was seen by the public
as having been corrupt and it set the stage for
campaign finance reform.
Also note: “The 1896 campaign is
often considered to be a realigning
election that ended the old Third
Party System and began the Fourth
Party System.”
This marked the rise of the
business sector over the agrarian
sector.
The impact of the law was
minimal.
There was no enforcement
mechanism and it did not apply to
primary elections. Corporations
found ways around the limits
imposed by the law.
The Publicity, or Federal Corrupt
Practices Act, enacted in 1910 and
amended in 1911 and 1925, placed
limits on spending on campaigns
and required that spending by
political parties be disclosed to the
public.
Hatch Act of 1939
Prohibited members of the
executive branch – with the
exception of the president, vice
president and a few other high
ranking officials – from partisan
political activity.
The Hatch Act of 1939 and its 1940
amendments asserted the right of
Congress to regulate primary
elections and included provisions
limiting contributions and
expenditures in Congressional
elections. – source.
In 1936, labor unions began spending
union dues to support federal candidates
sympathetic to the workers' issues. This
practice was prohibited by the SmithConnally Act of 1943, Pub. L. No. 78-89, 57
Stat. 163 (1943). Thus, labor unions,
corporations, and interstate banks were
effectively barred from contributing
directly to candidates for federal office.
Smith-Connally Act (1943)
Prohibited unions from making
direct contributions in federal
elections. They soon found ways to
make indirect contributions.
In 1944, the Congress of Industrial
Organizations (CIO), one of the
largest labor interest groups in the
nation, found a way to go around
the constraints of the SmithConnally Act by forming the first
political action committee, or PAC.
The Taft-Hartley Act of 1947
further barred both labor unions
and corporations from making
direct expenditures and
contributions in Federal elections.
Labor unions moved to work
around these limitations by
establishing political action
committees, to which members
could contribute.
PACs grew into major mechanisms
for funneling corporate and union
funds for campaigns.
From Open Secrets: “PACs have been around since
1944, when the Congress of Industrial Organizations
(CIO) formed the first one to raise money for the reelection of President Franklin D. Roosevelt. The PAC's
money came from voluntary contributions from union
members rather than union treasuries, so it did not
violate the Smith Connally Act of 1943, which forbade
unions from contributing to federal candidates.
Although commonly called PACs, federal election law
refers to these accounts as "separate segregated funds"
because money contributed to a PAC is kept in a bank
account separate from the general corporate or union
treasury.”
When the FEC was created, PACs
were required to register with
them and report their financial
activities including where they
received their money and how
they spent it.
Here’s a definition of a political action
committee from the FEC’s website:
“The term "political action committee" (PAC) refers to two
distinct types of political committees registered with the FEC:
separate segregated funds (SSFs) and non-connected
committees. Basically, SSFs are political committees established
and administered by corporations, labor unions, membership
organizations or trade associations. These committees can only
solicit contributions from individuals associated with connected
or sponsoring organization. By contrast, non-connected
committees--as their name suggests--are not sponsored by or
connected to any of the aforementioned entities and are free to
solicit contributions from the general public. For additional
information, consult our Separate Segregated Funds and
Nonconnected Committees fact sheet.”
In addition to connected and nonconnected PACs, two types of PACs
are worth pointing out:
Super PACs
Leadership PACs
From Open Secrets: “A super PAC, also known as an
independent expenditure-only committee, is a type of
political action committee that came into existence in 2010
following a federal court decision in SpeechNow.org v.
Federal Election Commission. Super PACs may raise and
spend unlimited sums of money for the sole purpose of
making independent expenditures to support or oppose
political candidates. Unlike traditional political action
committees, super PACs may not donate money directly to
candidates. Super PACs are required to disclose their donors
to the Federal Election Commission, although some super
PACs get around this requirement by listing 501(c) nonprofit
groups as their donors -- these groups are not required to
disclose their funders.”
From Open Secrets: A leadership PAC is a “A fund-raising
committee formed by a politician as a way to help fund other
candidates’ campaigns or pay for certain expenses not related to
the campaigns. Leadership PACs are often used by politicians
who aspire to leadership positions in Congress. By making
donations to other candidates, lawmakers hope to gain clout
among their colleagues that the lawmaker will utilize in a bid for
a leadership post or committee chairmanship. Politicians also
use leadership PACs to lay the groundwork for their own
campaigns for higher office. In recent years, leadership PACs
have become commonplace, even among freshman members of
Congress. Leadership PACs are considered separate from a
politician’s campaign committee, providing donors with a way
around limits on contributions to a candidate’s campaign
committee. Individuals can contribute up to $5,000 per year to a
member’s leadership PAC, even if they have already donated the
maximum to that member’s campaign committee.”
In recent elections, SuperPACs
have spent more money on
campaigns than have candidates.
Here is a list of political action
committees from Wikipedia
For detailed information about
PACs, click here for Political
MoneyLine.
Revenue Act of 1971
This law helped establish the system of
presidential public funding used in the United
States. The Revenue Act also placed limits on
campaign spending by Presidential nominees
who receive public money and a ban on all
private contributions to them. Beginning with
the 1973 tax year, individual taxpayers were able
to designate $1 to be applied to the Presidential
Election Campaign Fund.
Controversy: Should elections
receive public financing?
What is public finance?
Overview of state laws
An Idea Worth Saving
Ballotpedia
Federal Election Campaign Act (1971)
Required full reporting of campaign
contributions and expenditures, limited
spending on media advertising, and allowed for
corporations and unions to “use treasury funds
to establish, operate and solicit voluntary
contributions for the organization's separate
segregated fund (i.e., PAC). These voluntary
donations could then be used to contribute to
Federal races.”
It also attempted to establish such
a framework, but it was complex,
decentralized and ineffective:
”. . . the Clerk of the House, the Secretary of the Senate and the
Comptroller General of the United States General Accounting
Office (GAO) monitored compliance with the FECA, and the
Justice Department was responsible for prosecuting violations of
the law referred by the overseeing officials. Following the 1972
elections, although Congressional officials referred about 7,000
cases to the Justice Department, and the Comptroller General
referred about 100 cases to Justice,5 few were litigated. –
source.”
Reported campaign abuses in the
1972 presidential election – the
Watergate era - led to a series of
amendments in 1974.
Support emerged for an independent body
“to ensure compliance with the campaign
finance laws.” This would be the Federal
Election Commission.
Question: Was the 1972 election
especially corrupt?
1974 Amendments to FECA
The amendments placed limits on
both campaign contributions and
expenditures. These applied to
both candidates and PAC’s.
As we will see below, some of
these were declared
unconstitutional.
More importantly it established
the Federal Election Commission:
“ . . . an independent agency to assume the
administrative functions previously divided between
Congressional officers and GAO. The Commission was
given jurisdiction in civil enforcement matters,
authority to write regulations and responsibility for
monitoring compliance with the FECA. Additionally, the
amendments transferred from GAO to the Commission
the function of serving as a national clearinghouse for
information on the administration of elections.”
This was the original process for
placing people on the commission:
“ . . . the President, the Speaker of the
House and the President pro tempore of
the Senate each appointed two of the six
voting Commissioners. The Secretary of the
Senate and the Clerk of the House were
designated nonvoting, ex-officio
Commissioners.”
“The 1974 amendments also completed
the system currently used for the public
financing of Presidential elections. The
amendments provided for partial Federal
funding, in the form of matching funds, for
Presidential primary candidates and also
extended public funding to political parties
to finance their Presidential nominating
conventions.”
The FECA was further amended in
1976 and 1979.
The 1976 amendments repealed
expenditure limits, changed how
commissioners were appointed and limited
PAC solicitations.
The 1979 amendments “simplified
reporting requirements, encouraged party
activity at State and local levels and
increased the public funding grants for
Presidential nominating conventions.”
The 1976 amendments retained a six
member commission but changed how
they were appointed:
They were to be “appointed by the President of
the United States and confirmed by the United
States Senate. Each member serves a six-year
term, and two seats are subject to appointment
every two years. . . . The Chairmanship of the
Commission rotates among the members each
year, with no member serving as Chairman more
than once during his or her term.”
But the commission was to be
evenly divided politically:
“By law, no more than three
Commissioners can be members of the
same political party, and at least four votes
are required for any official Commission
action. Critics of the Commission argue
that this structure regularly causes
deadlocks on 3 -3 votes.”
The purpose of the 1979
amendments was to draw a
distinction between contributions
to a specific candidates’ campaign
and contributions intended to
build parties and get out the vote.
This was also a response to the decision in
Buckley v Valeo – see below for more on that.
This distinction became know as
hard money and soft money. The
former is regulated, the latter is
not.
But the problem was distinguishing
between the two. The use of soft
money negated the impact of the
limits placed on hard money.
From Open Secrets: “Hard Money” refers to the
“regulated contributions from an individual or
PAC to a federal candidate, party committee or
other PAC, where the money is used for a
federal election. Hard money is subject to
contribution limits and prohibitions and can be
used to directly support or oppose a candidate
running for federal office. Hard money can pay
for television ads, mass mailings, bumper
stickers, yard signs and other communications
that mention a specific candidate.”
From Open Secrets: “Soft Money” refers to “Contributions made outside the
federal contribution limits to a state or local party, a state or local candidate
or an outside interest group. The Bipartisan Campaign Reform Act of 2002
banned the national political parties from raising soft money. Unlike hard
money, soft money was not supposed advocate the election or defeat of a
federal candidate. At one time, unlimited soft money contributions were
routinely solicited and accepted by the national political parties. The money
was supposed to be used for state and local elections and generic “partybuilding” activities, including voter registration campaigns and get-out-thevote drives. However, the parties increasingly used soft money for so-called
“issue” ads that criticized or touted a federal candidate’s record just before an
election, as well as other activities that were intended to influence the
outcome of a federal election. Soft money was considered by many to be a
major loophole in campaign finance law that allowed the parties to raise
hundreds of millions of unregulated dollars. The Democrats and Republicans
together collected more than $500 million in soft money during the 2002
election cycle.”
The amendments also provided
opportunities for funding for generic
advertising and the creation of “issue ads”
intended to educate voters, not advocate
for a specific candidate.
But the line between advertisement for a
specific candidate and a general issue ad
was easily blurred.
Which led to calls for further reform.
Bipartisan Campaign Reform Act
(BCRA), 2002
This law was passed to address the
increased use of soft money and the
proliferation of issue ads. It also increased
contribution limits, addressed coordinated
and independent expenditures, and
increased disclaimers on advertising. It
also included The millionaires amendment.
The use of soft money was banned
by national parties: It prohibited
national political party committees
“from raising or spending any
funds not subject to federal limits,
even for state and local races or
issue discussion.”
It limited issues ads “defining as "electioneering
communications" broadcast ads that name a
federal candidate within 30 days of a primary or
caucus or 60 days of a general election, and
prohibiting any such ad paid for by a corporation
(including non-profit issue organizations such as
Right to Life or the Environmental Defense Fund)
or paid for by an unincorporated entity using
any corporate or union general treasury funds.”
It included the Stand By your Ad
provision. Advertisement explicitly
endorsing a candidate and stating
the candidate’s opinions has to be
endorsed by the candidate.
I am X and I approve this message.
See the FEC’s description of the act
here.
These would be challenged to the
courts – more on this below.
One consequence of the law: The
rise of 527 Organizations.
A definition from open secrets:
A tax-exempt group organized under section 527 of the Internal Revenue
Code to raise money for political activities including voter mobilization efforts,
issue advocacy and the like. Currently, the FEC only requires a 527 group to
file regular disclosure reports if it is a political party or political action
committee (PAC) that engages in either activities expressly advocating the
election or defeat of a federal candidate, or in electioneering
communications. Otherwise, it must file either with the government of the
state in which it is located or the Internal Revenue Service.
Prior to the Citizens United v. Federal Election Commission ruling by the U.S.
Supreme Court in January 2010, many 527s run by special interest groups
raise unlimited "soft money," which they used for voter mobilization and
certain types of issue advocacy, but not for efforts that expressly advocated
the election or defeat of a federal candidate or amount to electioneering
communications. The Citizens United ruling allows 527 committees to raise
unlimited funds from individuals, corporations and unions to expressly
advocate for or against federal candidates, and since the controversial ruling,
several so-called 527 groups have registered with the FEC as "super PACs."
An unsuccessful recent proposal:
Democracy Is Strengthened by
Casting Light On Spending in
Elections Act.
The Disclose Act
This was a response to the Supreme
Court’s Citizens United decisions.
“The bill, as introduced, included banning U.S.
corporations with 20 percent or more foreign
ownership from influencing election outcomes through
the use of campaign contributions; preventing Troubled
Asset Relief Program (TARP) recipients from making
political contributions; giving shareholders,
organization members, and the general public access to
information regarding corporate and interest group
campaign expenditures; and requiring disclosure of
membership information by organizations with more
than 500,000 members that made political ads”
It was successfully filibustered in
the Senate in 2010, but has been
revived periodically.
Basic Provisions of Current
Campaign Finance Law.
It might be wise to walk through
the specific provisions in current
campaign finance law.
In these following slides, we’ll walk
through the content of this FEC
webpage.
In brief, the page states what donations do and
do not need to be disclosed, describes
contribution limits, details what contributions
and expenditures are prohibited, defines
independent expenditures, explains limits on
corporate, union or party activities, describes
the Presidential Campaign Fund Act and the
grants available for primary and general
elections as well as party conventions.
Note that constitutional questions
are commonly raised about all of
these issues.
Here we go:
Disclosures: “The FECA requires candidate
committees, party committees and PACs to file
periodic reports disclosing the money they raise
and spend. Candidates must identify, for
example, all PACs and party committees that
give them contributions, and they must identify
individuals who give them more than $200 in an
election cycle. Additionally, they must disclose
expenditures exceeding $200 per election cycle
to any individual or vendor.”
Contribution Limits:
The following table outlines
campaign contribution limits for
2013-2014.
Prohibited Contributions and
Expenditures: “The following are
prohibited from making
contributions or expenditures to
influence federal elections:
Corporations, Labor organizations,
Federal government contractors,
and Foreign nationals.
This refers to direct contributions,
not independent expenditures.
That is a controversial topic we’ll
highlight below.
Furthermore, with respect to federal elections:
No one may make a contribution in another person's
name or make a contribution in cash of more than
$100.
In addition to the above prohibitions on contributions
and expenditures in federal election campaigns, the
FECA also prohibits foreign nationals, national banks
and other federally chartered corporations from
making contributions or expenditures in connection
with state and local elections.
Independent Expenditures: “Under federal election law,
an individual or group (such as a PAC) may make
unlimited "independent expenditures" in connection
with federal elections.
An independent expenditure is an expenditure for a
communication which expressly advocates the election or defeat of
a clearly identified candidate and which is made independently
from the candidate's campaign. To be considered independent, the
communication may not be made with the cooperation,
consultation or concert with, or at the request or suggestion of, any
candidate or his/her authorized committees or a political party, or
any of their agents. While there is no limit on how much anyone
may spend on an independent expenditure, the law does require
persons making independent expenditures to report them and to
disclose the sources of the funds they used.”
Here’s more detail on how the FEC
deals with coordinated
communications and independent
expenditures.
Corporate and Union Activity: Although
corporations and labor organizations may
not make contributions or expenditures in
connection with federal elections, they
may establish PACs. Corporate and labor
PACs raise voluntary contributions from a
restricted class of individuals and use those
funds to support federal candidates and
political committees.
Political Party Activity: Political parties
are active in federal elections at the
local, state and national levels. Most
party committees organized at the
state and national levels as well as
some committees organized at the
local level are required to register with
the FEC and file reports disclosing their
federal campaign activities.
Party committees may contribute funds directly to federal
candidates, subject to the contribution limits. National and state
party committees may make additional "coordinated
expenditures," subject to limits, to help their nominees in
general elections. Party committees may also make unlimited
"independent expenditures" to support or oppose federal
candidates, as described in the section above. National party
committees, however, may not solicit, receive, direct, transfer, or
spend nonfederal funds. Finally, while state and local party
committees may spend unlimited amounts on certain grassroots
activities specified in the law without affecting their other
contribution and expenditure limits (for example, voter drives by
volunteers in support of the party's Presidential nominees and
the production of campaign materials for volunteer distribution),
they must use only federal funds or "Levin funds" when they
finance certain "Federal election activity."
Party committees must register
and file disclosure reports with the
FEC once their federal election
activities exceed certain dollar
thresholds specified in the law.
The Presidential Election Campaign
Fund Act: Under the Internal
Revenue Code, qualified
Presidential candidates receive
money from the Presidential
Election Campaign Fund, which is
an account on the books of the
U.S. Treasury.
Primary Matching Payments: Eligible candidates
in the Presidential primaries may receive public
funds to match the private contributions they
raise. While a candidate may raise money from
many different sources, only contributions from
individuals are matchable; contributions from
PACs and party committees are not.
Furthermore, while an individual may give up to
$2,600 to a primary candidate, only the first
$250 of that contribution is matchable.
To participate in the matching fund program, a
candidate must demonstrate broad-based
support by raising more than $5,000 in
matchable contributions in each of 20 different
states. Candidates must agree to use public
funds only for campaign expenses, and they
must comply with spending limits. Beginning
with a $10 million base figure, the overall
primary spending limit is adjusted each
Presidential election year to reflect inflation. In
2012, the limit was $45.6 million.
General Election Grants: The Republican
and Democratic candidates who win their
parties' nominations for President are each
eligible to receive a grant to cover all the
expenses of their general election
campaigns. The basic $20 million grant is
adjusted for inflation each Presidential
election year. In 2012, the grant was $91.2
million.
Nominees who accept the funds must agree not
to raise private contributions (from individuals,
PACs or party committees) and to limit their
campaign expenditures to the amount of public
funds they receive. They may use the funds only
for campaign expenses.
A third party Presidential candidate may qualify
for some public funds after the general election
if he or she receives at least five percent of the
popular vote.
Party Convention Grants: Each major
political party may receive public funds to
pay for its national Presidential nominating
convention. The statute sets the base
amount of the grant at $4 million for each
party, and that amount is adjusted for
inflation each Presidential election year. In
2012, the major parties each received
$18.25 million.
Other parties may also be eligible
for partial public financing of their
nominating conventions, provided
that their nominees received at
least five percent of the vote in the
previous Presidential election.
Supreme Court Cases
Almost all campaign finance laws
have been challenged in court. This
should not be a surprise given the
stakes associated with elections, as
well as the degree to which
financing campaigns overlaps
constitutionally defined freedoms.
Some of these challenges have been successful.
An ongoing question: Do campaign
finance laws, as designed and
implemented, violate
constitutional freedoms, especially
the freedom of speech?
Frontline: The Constitution and
Campaign Finance.
Many of the laws outlined above
were challenged before the courts.
Here is a look at some of these
cases and what the courts decided.
1921 - Newberry v. United States
Struck down the part of the Federal
Corrupt Practices Act that placed spending
limits on primary campaigns or other
nominations processes for federal office:
“Justice James Clark McReynolds held that
the U.S. Constitution did not grant
Congress the power to regulate primary
elections or political party nomination
processes.”
1934 – Burroughs v United States
The U.S. Supreme Court upheld the
reporting requirements of the
Federal Corrupt Practices Act
against a constitutional challenge.
Congress has the power to pass
laws that protect the integrity of
the federal election process.
The Hatch Act was challenged as being a violation of
free speech, but the Supreme Court disagreed.
“In passing the Hatch Act, Congress affirmed that
partisan activity government employees must be
limited for public institutions to function fairly and
effectively. The courts have held that the Hatch Act is
not an unconstitutional infringement on employees’
first amendment right to freedom of speech because it
specifically provides that employees retain the right to
speak out on political subjects and candidates.”
1976 Buckley v. Valeo
This was an important challenged to the
Federal Election Campaign Act of 1971’s
limits on campaign contributions and the
ability of candidates to give unlimited
money to their own campaigns. It ruled
that limitations on contributions were
constitutional, but limits on spending were
not.
“the case remains the starting
point for judicial analysis of the
constitutionality of campaign
finance restrictions”
Worth a look if you feel ambitious: The 527
Problem . . . and the Buckley Problem
“ . . . the case held that restrictions on campaign contributions and
spending, a form of political speech and association, could not be
justified by the desire to equalize candidates, writing, “the concept
that government may restrict the speech of some [in] order to
enhance the relative voice of others is wholly foreign to the First
Amendment.” However, the Court did find that the government's
compelling interest in preventing "corruption or its appearance" could
justify restrictions that went beyond bribery. The Court ruled that
because contributions involved the danger of "quid pro quo"
exchanges, in which the candidate would agree, if elected, to take or
not to take certain actions in exchange for the contribution, limitations
on contributions could generally be justified. However, the Court
struck down limitations on spending by candidates and spending by
others undertaken independently of candidates, on the grounds that
spending money did not, by definition, involve such candidate/donor
exchanges.“ - source
Try to remember this point:
Campaign contributions can
corrupt; Campaign spending can
not.
At least according to the Supreme Court.
This is still a controversial point:
Campaign spending was defined as
speech.
Not everyone agrees.
The decision also established that
limits on campaign spending can
only extend to express advocacy of
a specific candidate.
It cannot extend to groups
involved in discussing candidates
and ads without engaging in
advocacy.
This led to the rise of 527
organizations which are taxexempt under Section 527 of the
Internal Revenue Code. “A 527
group is created primarily to
influence the selection,
nomination, election, appointment
or defeat of candidates to federal,
state or local public office.”
Note that the distinction between
PACs and 527 organizations is
slippery. PACs are 527
organizations, but so can any other
organization that provides
information about political matters
short of advocating for or against a
candidate.
By highlighting this distinction,
Buckley v Valeo fueled the rise of
these groups.
2003: McConnell v. FEC
Key provisions of the BCRA were upheld,
including the electioneering communications
provision (disclosures were necessary for
corporate and union funding of election ads and
these ads could not run 30 days prior to primary
elections and 60 days prior to general elections)
and the soft money ban.
The majority ruled that the limitations
placed on speech (campaign finance) were
minimal and were “justified by the
government's legitimate interest in
preventing "both the actual corruption
threatened by large financial contributions
and... the appearance of corruption" that
might result from those contributions.”
2006: Federal Election Commission
v. Wisconsin Right to Life, Inc.
The ban on issue ads prior to
elections established by the BCRA
was limited, some members of the
court expressed an interest in
overturning the ban altogether.
2008: Davis v. Federal Election
Commission
The BCRA’s millionaire’s
amendment was overturned.
Detail from Scotus Blog here.
2008: Shays and Meehan v. FEC
2010: Citizens United v. Federal
Election Commission
Overturned restrictions on independent
corporate and labor union expenditures in
campaigns, notably the restriction on issue
ads 30 days prior to primary elections and
60 days prior to general elections.
The decision allowed corporations
and unions to make direct
independent expenditures on
advertisements with political
content and not funnel these
through their political action
committee.
From Open Secrets: “Independent expenditures are advertisements
that expressly advocate the election or defeat of specific candidates
and are aimed at the electorate as a whole. Under federal rules, these
expenditures must be made completely independent of the
candidates, with no coordination. In January 2010, the U.S. Supreme
Court ruled in Citizens United v. Federal Election Commission that
corporations and unions may fund independent expenditures with
money from their general treasuries. Prior to that, independent
expenditures could only be made by the organization's PAC. In the
wake of Citizens United, some groups continue to use their PACs to
fund independent expenditures, while others are taking advantage of
the new freedom to spend directly from treasury funds or through
new "super PACs" that can use unlimited donations to run
independent expenditures. Individuals, political parties, unions,
corporations, PACs and other groups making independent
expenditures must disclose the name of the candidates who benefit
and must itemize the amounts spent in a report to the Federal Election
Commission.”
The decision was immediately
controversial, some arguing that the court
had rolled back restrictions on corporate
and union involvement in elections dating
back a century, other arguing that by
granting free speech rights to corporations
they fueled the perception that
corporations are “people” under the law.
Proponents argue the decision
strengthened free speech.
Opponents argued it opened the
door for corruption, and electoral
dominance by well funded
business interests.
The rise of 501(c)(4) organizations has
been traced to this decision. Applying for
501(c)(4) status allows a group to be not
only tax exempt, but to not have to
disclose its donors. But they have to then
prove that they are a social welfare
organization not a political organization.
But determining which is which is not only
tough to do, but is politically problematic.
See IRS Scandal for an example.
For further reading on the case:
Money Unlimited
Open Secrets
ScotusBlog
2010: Speechnow.org v. FEC
This was not a Supreme Court case,
but instead a DC Circuit Court case
that applied the Citizens United
decision to the fact that limits
existed on the amount that
individuals can make to 527
organizations.
From Open Secrets: SpeechNow.org v. FEC was “A
federal court decision in March 2010 that found that it
was unconstitutional to impose a contribution limit on
groups whose sole purpose was funding independent
expenditures. The decision relied on the U.S. Supreme
Court's ruling in Citizens United v. Federal Election
Commission from January 2010, which granted
corporations and unions the ability to use their general
treasury money for political expenditures. In the wake
of the SpeechNow.org decision, scores of new groups -often called super PACs -- declared to the Federal
Election Commission their intent to raise unlimited
donations from corporations, unions and individuals.”
This further expounded the idea that
free speech rights applied to any entity
making an independent expenditure in
an election. The court noted that the
language of the First Amendment
stated that laws could not restrict
speech without mentioned the source
of that speech.
Registering as a PAC and reporting
contributions did not violate
constitutional freedoms and were
both upheld.
Click here for the FEC’s description of the case.
A final concluding point for this section:
We’ve seen a revolution in attitudes about
campaign funding initiated by the court.
It’s very likely still underway. Cases are
commonly accepted that make claims that
current restrictions on campaign funding
are unconstitutional.
Here is a contemporary example as I’m writing
this: are aggregate limits on contributions from
individuals unconstitutional?
Note: The Supreme Court also has
a handful of rulings dealing with
state and local campaign laws.
I cover these in GOVT 2306, as well
as those cases unique to Texas.
The Federal Election Commission
The FEC is the national executive
agency charged with overseeing
campaign finance.
Prior to its creation, campaign finance laws had
no teeth. So until 1975, there was no
mechanism in place to address issues associated
with campaign finance, and even since then,
there have been questions about the
effectiveness of the commission.
A description of the agency from
the FEC webpage :
In 1975, Congress created the Federal Election
Commission (FEC) to administer and enforce the
Federal Election Campaign Act (FECA) - the statute that
governs the financing of federal elections. The duties of
the FEC, which is an independent regulatory agency,
are to disclose campaign finance information, to
enforce the provisions of the law such as the limits and
prohibitions on contributions, and to oversee the public
funding of Presidential elections.
The Commission is made up of six members, who
are appointed by the President and confirmed by the
Senate. Each member serves a six-year term, and two
seats are subject to appointment every two years. By
law, no more than three Commissioners can be
members of the same political party, and at least four
votes are required for any official Commission action.
This structure was created to encourage nonpartisan
decisions. The Chairmanship of the Commission
rotates among the members each year, with no
member serving as Chairman more than once during
his or her term.
If you’d like, here’s a link to the
Federal Election Commission’s You
Tube Page. It contains a variety of
videos describing different aspects
of the commission.
And here’s the Wikipedia.
As with all independent regulatory
agencies, it not only oversees the
implementation of law over a
specific subject, it has the ability to
issue rules and advisory opinions
over what it sees as proper within
its mandate.
But since the industry it regulates is the
electoral industry, there are questions
about whether it has been captured by it.
Since the electoral industry includes
members of Congress as well as the
president, there are further questions
about whether these people want the FEC
to have the power to regulate elections
according to the law.
Advisory Opinions
The FEC and the Campaign Finance Law
Federal Election Commission
Meeting Notices and Rule Changes
http://www.fec.gov/law/law_rule
makings.shtml
Is the FEC effective?
Is it a broken agency?
Is it a captured agency?
From FixTheFEC.org: Senator John McCain (R-AZ)
regularly refers derogatorily to the FEC as the “the little
agency that can’t” or the “muzzled watchdog,” for good
reason. By design it was structured to be ineffective
and glacially slow.
Put simply, the Commission is excessively partisan and
political, the enforcement process is cumbersome and
inefficient, and the penalties levied are too anemic to
deter violations of the law. To be sure, Congress has a
vested interest in preventing any reform of the FEC;
members, after all, would be the targets of many
enforcement actions.
Some concluding thoughts